Cosco Bulk Carrier Company Ltd v Team-Up Owning Company Ltd (M/v Saldanha) [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Gross J. |
| Judgment Date | 11 June 2010 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 June 2010 |
Queen's Bench Division (Commercial Court)
Gross J.
Luke Parsons QC and David Lewis (instructed by Holman Fenwick Willan) for the applicant.
Andrew Baker QC and Sean O'Sullivan (instructed by Ince & Co) for the respondent.
The following cases were referred to in the judgment:
Andre et Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] CLC 300.
Chandris v Isbrandtsen-Moller Co IncELR [1951] 1 KB 240.
Kelman v LivanosUNK [1955] 1 Ll Rep 120.
Kidston v Empire Marine Insurance CoELR (1866) LR 1 CP 535.
Mareva Navigation Co v Canaria Armadora SA (The Mareva AS)UNK [1977] 1 Ll Rep 368.
Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua)UNK [2010] EWHC 280 (Comm); [2010] 1 CLC 318.
Piccinini v Partredereit Trigon II (The Alfred Trigon)UNK [1981] 2 Ll Rep 333.
Royal Greek Government v Minister of TransportUNK (1949) 82 Ll L Rep 196.
Thomas Wilson Sons & Co v Owners of Cargo of the Xantho (The Xantho)ELR (1887) 12 App Cas 503.
Shipping — Piracy — Off-hire under time charterparty — Off-hire clause in NYPE form of charterparty — Loss of time resulting from seizure by pirates — No “detention by average accidents to ship or cargo”— Incident not accident resulting in damage to vessel — No “default and/or deficiency of men”— Seizure by pirates not “any other cause” but totally extraneous cause — Charterers failed, individually and cumulatively, to satisfy burden of proof resting on them to come clearly within exceptions in off-hire provisions.
This was an appeal by charterers from an arbitrators' decision that detention by pirates did not entitle charterers to put the vessel off-hire under cl. 15 of the NYPE form of time charterparty.
Clause 15 of the charterparty provided that “in the event of the loss of time from default and/or deficiency of men including strike of Officers and/or crew or deficiency of…stores, fire, breakdown or damages to hull, machinery or equipment, grounding, detention by average accidents to ship or cargo, dry-docking for the purpose of examination or painting bottom, or by any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost…”
The vessel was a Panamax size bulk carrier. The vessel was seized by Somali pirates whilst sailing through the transit corridor in the Gulf of Aden. The pirates compelled the master to sail the vessel to the waters off the Somali town of Eyl where the vessel remained for some two months until released by the pirates.
Loss of time resulting from the seizure by pirates was not in dispute. The tribunal held that the “full working” of the vessel had been prevented by the actions of the pirates. The issue on appeal was whether, contrary to the decision of the tribunal, charterers could rely on one of the causes in cl. 15, namely “detention by average accidents to ship or cargo”, “default and/or deficiency of men” or “any other cause”.
Held dismissing the appeal:
1. There was no “detention by average accidents to ship or cargo”. An “average accident” meant an accident which caused damage. On any view, this incident did not result in damage to the vessel. Further, however approached, the incident could not properly be described as an “accident”. An obviously deliberate and violent attack was not described as an accident, no matter how unexpected it might have been to the victim. Nor was it an accident “to” the ship, meaning physically affecting it. In the insurance context, “average” tended to be used to mean damage which was less than a constructive total loss. The word did not mean a maritime peril. Thus, in context, it was intended to refer to damage rather than to a peril, so that in cl. 15 an average accident to ship or cargo was an accident which caused damage to ship or cargo, but not total loss. (The Mareva AS [1977] 1 Ll Rep 368 applied.)
2. There was no “default and/or deficiency of men”. In context “default of men” in cl.15 had the limited meaning of a refusal by officers or crew to perform all or part of their duties as owed to the shipowner and not the negligent or inadvertent performance of those duties. It followed that, even on the assumption that the officers and crew had failed to take recognised anti-piracy precautions, charterers” case failed. It had been held that “deficiency of men” did not extend to cover a wilful refusal to work and that was the genesis of the addition of the “default and/or” wording. The insertion of that phrase with the additional words “including strike of Officers and/or crew” showed that the parties intended that a refusal to perform duties would be an off-hire cause. The decisive factor was the allocation of the risk of delay under a typical time charterparty. If charterers” case was well-founded, it would follow that on almost every occasion when officers or crew negligently or inadvertently fail to perform their duties causing some loss of time, then a vessel would be off-hire under such wording. That would be so whether or not owners were liable in damages for breach of contract. If the owners did not provide a workforce in the numbers necessary to perform the chartered services when required, there was a “deficiency of men”; if the owners did provide the numbers necessary, but the workforce refused to perform the services, there was a “default”. That was distinct and separate from an individual transient act of negligence by a crew member or officer in carrying out of the chartered services. (Royal Greek Government v Minister of TransportUNK(1949) 82 Ll L Rep 196 considered.)
3. Clause 15 contained the wording “any other cause” rather than the wording “any other cause whatsoever”. That difference in wording was significant. In the absence of the word “whatsoever”, the sweeping up provision was to be construed in a limited way reflecting the general context of cl. 15, which related to the physical condition and efficiency of the vessel. In that context seizure by pirates was a totally extraneous cause, falling outside the scope of the sweeping up wording. The effect of the bargain contained within cl. 15, construed in its general context, was that owners did not take the risk of the full working of the vessel being prevented by an extraneous cause such as piracy. The charterers did assume that risk. (The Laconian Confidence[1997] CLC 300 applied.)
4. The seizure of a ship by external actors was a recognised peril; but no such peril was covered by cl. 15 of the charterparty. Moreover, there was in the charterparty a clause (cl. 40) dealing inter alia with seizures. However, that clause did not extend to cover seizure by pirates. If the parties were minded to treat seizures by pirates as an off-hire event under a time charterparty, they could do so straightforwardly and most obviously by way of an express provision in a “seizures” or “detention” clause such as cl. 40. In this case, the various submissions advanced by charterers failed, individually and cumulatively, to satisfy the burden of proof resting on them to come clearly within the wording of the off-hire provisions contained in cl. 15 of the charterparty.
Gross J:
1. The subject-matter of this case is unfortunately topical: namely, Somali pirates. In Masefield v Amlin; The Bunga Melati Dua[2010] EWHC 280 (Comm); [2010] 1 CLC 318, the context was marine insurance; here the issue concerns off-hire under a time charterparty.
2. The question is whether detention by pirates, piracy or perhaps the effects of piracy entitled charterers to put the vessel off-hire in reliance upon that version of cl.15 of the NYPE form of charterparty agreed by the parties in the charterparty of 25 June 2008 (“the charterparty”).
3. Cl. 15 of the charterparty provided as follows:
“That in the event of the loss of time from default and/or deficiency of men including strike of Officers and/or crew or deficiency of…stores, fire, breakdown or damages to hull, machinery or equipment, grounding, detention by average accidents to ship or cargo, dry-docking for the purpose of examination or painting bottom, or by any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost…' (italics added)
4. By its Award on Preliminary Issues dated 8 September 2009 (“the award”), an eminent arbitration tribunal (“the tribunal”) held unanimously that the answer to the question was “no”. From that decision the Applicants (“Charterers”) appeal.
5. For completeness, the tribunal also considered preliminary issues arising under other clauses of the charterparty. In summary, the tribunal held that the vessel was not off-hire under cl. 39 of the charterparty and that the war risk and insurance provisions of the charterparty did not preclude the Respondents (“Owners”) from claiming hire in respect of periods during which the vessel was under the control of pirates. There is no appeal from these determinations of the tribunal and no more need be said of them. This...
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